Dollar Extends Weekly Surge on Yellen Commentary as Metals Drop 

• Japan’s Topix climbing for a seventh day as yen languishes
• Fed Chair sees hike relatively soon, plans to serve full term

The dollar extended its advance after Federal Reserve Chair Janet Yellen signaled an interest-rate hike could be imminent, while metals declined. Most Asian stocks rose, with Japan shares entering a bull market.

The Bloomberg Dollar Spot Index climbed 0.3 percent, strengthening for the seventh time in eight days and trading at its highest level since February. The Korean won was the biggest decliner in Asia, followed by Singapore’s dollar. Japan’s Nikkei 225 Stock Average extended its rebound from a June low to more than 20 percent, after the S&P 500 Index came within four points of a record on Thursday. The greenback’s strength weighed on oil, gold and copper, with the industrial metal set for its first weekly slide in four weeks. Sovereign debt from New Zealand to Japan fell.

In her first public statement since the U.S. election, Yellen told lawmakers that the Fed is close to boosting borrowing costs as the economy continues to gain traction. The comments torpedoed Treasuries, while American financial stocks pushed their rally since Donald Trump’s presidential victory back above 10 percent Thursday. Speculation that he will boost fiscal stimulus continues to lift industries that are perceived to benefit from economic growth. The president-elect met with Japanese Prime Minister Shinzo Abe in New York late on Thursday.

“Right now it is a dollar-dominated story,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note. “But beyond a Fed rate hike next month, many questions remain over the path of policy going forward – for both fiscal and monetary.”

China reported on Friday that new home prices, excluding subsidized housing, rose in 62 out of 70 cities in October from a month earlier. Thailand issues figures on foreign-currency reserves later today.

Stocks

Shippers and carmakers led gains on the Topix index in Tokyo, which rose 0.4 percent. The Nikkei 225 closed at its highest level since January.

Telecommunications and consumer stocks drove Australia’s S&P/ASX 200 Index up 0.4 percent, while South Korea’s Kospi index slipped 0.3 percent. New Zealand’s S&P/NZX 50 Index climbed 0.6 percent.

Hong Kong’s Hang Seng China Enterprises Index was little changed as of 2:05 p.m. local time, while the Shanghai Composite Index dropped 0.3 percent on the mainland.

S&P 500 futures slipped 0.1 percent to 2,181.75 Friday, following a 0.5 percent advance in the underlying benchmark Thursday. Bank shares led the index to its highest level since Aug. 15, when the gauge reached an all-time high.

“Markets have arrived at a point where they need to weigh the risks of being caught out by the potential stimulatory impacts of the Trump administration’s policies, against the risk of being caught by those policies not being implemented,” Ric Spooner, chief market analyst in Sydney at CMC Markets, said in an e-mail.

Abe said Trump was a trustworthy leader after meeting with the U.S. president-elect in New York. The Japanese premier said his talks with Trump took place in a “warm atmosphere” inside Trump Tower, potentially mitigating concern over the Republican’s election back home. During the campaign, Trump vowed to drop the Trans-Pacific Partnership trade deal and also accused Japan of manipulating the yen.

Currencies

Bloomberg’s dollar gauge, which tracks the greenback against 10 major peers, climbed for a third session.

The yen weakened 0.4 percent to 110.58 per dollar and is on track for its second weekly retreat of more than 3 percent.

“The fact that she didn’t push back against market expectations for a December hike is perhaps the most significant takeaway,” said Jack Spitz, managing director for foreign exchange at National Bank of Canada in Toronto, referring to Fed Chair Yellen. “The dollar is higher as a result.”

Odds on the Fed raising the benchmark rate are now at 96 percent, up from 80 percent a week ago and less than 65 percent a month ago, according to futures trading tracked by Bloomberg.

The won slipped 0.6 percent, while Singapore’s currency slid 0.5 percent. China’s yuan slid 0.3 percent to its weakest level since June 2008.

Malaysia’s ringgit retreated 0.4 percent. The nation’s central bank said it’s intervening in the currency market.

Bonds

Australian government bonds led the retreat in the Asia-Pacific, with yields on 10-year notes up 15 basis points to 2.72 percent.

Similar-maturity New Zealand debt yielded 3.1 percent, up 11 basis points, while yields on 10-year Japanese bonds gained three basis points to 0.035 percent.

Yields on Treasuries due in a decade increased three basis points to 2.33 percent, extending the eight basis-point jump last session.

Commodities

Gold tumbled to the lowest in more than five months, dropping as much as 0.9 percent to $1,205.71 an ounce. The precious metal has plunged as investors digested the implications of Trump’s policies, which may boost the economy and lead to higher borrowing costs. Rising bond yields and a stronger dollar are also weighing on gold, which doesn’t pay interest.

Oil futures declined as much as 1.3 percent in New York, trimming the first weekly advance since late October.

Copper retreated 1.3 percent in London to lead declines by industrial metals. Volume in Shanghai fell to 524,452 contracts on Thursday, less than a third of 1.83 million on Monday.

Source: Bloomberg

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